Revenue-to-TVL Ratio

The revenue-to-TVL ratio is a financial metric that compares a protocol's annual revenue to the total value locked within its smart contracts. This ratio provides insight into how efficiently the capital deposited in a protocol is being utilized to generate fees.

A higher ratio indicates that the protocol is generating more revenue per dollar of locked assets, suggesting higher capital efficiency. Conversely, a low ratio might imply that the protocol is over-collateralized or not attracting sufficient trading volume relative to its liquidity.

Investors use this to compare the productivity of different DeFi platforms. It helps identify protocols that are effectively attracting users and facilitating activity.

This metric is particularly useful for evaluating decentralized exchanges, lending platforms, and yield aggregators. It serves as a benchmark for capital productivity in the DeFi sector.